Saturday, January 17, 2009

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Which condo to buy? Meraprime or Park Valley? Recommendations and Discussions

Hello Smart Buyer!
I would like to ask your expert opinion if value of property will likely appreciate more at Tiong Bahru (eg: Meraprime) where amenities are aplenty or tail-end of river valley (eg: Valley Park) when the market/economy recovers. Thanks.

Smart Buyer replied:
No doubt Meraprime has a good location but the current price a mind-blowing $12xx psf and it's a 99LH property. It reminds me of how hot nearby Central Green was in the mid 90s. Now it's going at about $8xx psf. So you can see a significant discount for older condos in the same locations. You may also like to take note that between 2002-2004, Central Green dropped as low as $4xxpsf. That will give some indication of the risk of entering at a high price.

Valley Park doesn't have the MRT-location of Meraprime but it's FH. Going price is still high at $1xxx psf. Prices fell to about $6xx psf in 2003.

In summary, 99LH property price falls faster in a downturn and with age but commands better rental rate. (If you like more info on comparing 99LH with FH, ps do a blog search here.)

Quite obvously, this is still not the time to enter the market. I don't know if prices will fall to an attractive level for these properties to make good investment value. I'm in no hurry. In fact, I'd simply turn to other types of investment if property remains over-valued. I don't know if you're in the same situation, so I can't tell what you should do.

Who's to know how long it will take the property market to recover? Whether they will appreciate or not, or more importantly by how much, would depend on your purchase price. At the current price level, I can see very little upside and plenty of risk.


Original post: Property Buying Advice: What to buy

Blog visitors are welcome to contribute their recommendations on which condo to buy.

May also want to read:
99 Leasehold Property: Calculation of Depreciation Rate based on Singapore Land Authority Data
Spore Property History 1960-2008
Property Investment Tip: Don't put all your eggs in one basket
HDB Resale Price Index 1990-2008: Graph & Chart

12 comments:

Anonymous said...

Hello
Found your blog recently and its excellent.
With regard to the above post - yes, it is way too soon to enter the market now. the resale property price index is no where near the 2004 - 2006 levels yet.

If we believe this recession is going to be as bad as the SARs or Financial crisis or even worse, then logically one should till the resale property index to be closer to the 2004 - 2006 levels. On that basis, now is not the right time - try 4Q 09 or 1Q10.

cheers
M

Anonymous said...

hi smart buyer.. help me..

few days ago i was offered regency suite about $900 psf.do you think i should buy it or i should wait..i dont know if iam entering at high price or not.thanks

Smart Buyer said...

I agree with the above comment, ie, now is not the right time yet. That's my opinion.

Anonymous said...

if we all agree that property prices will fall and we should wait - then the best strategy is to STOP looking at property or else you will be tempted and your common sense reasoning will not prevail. So in my opinion, dont look at the property yet, or you will feel tempted against your better judgement.

cheers
M

Anonymous said...

hi Smart Buyer

From the comments above, It look up like the property price may still some more to fall. My first thought is that those who lost jobs and in financial difficulties may be the first to sell. In this environment that seems like property prices falling every day and newly launch private properties come up this year and next year, do you think is it difficult for those who are selling "older" or "second hand" property?

Smart Buyer said...

Hi M,
It's true that some buyers can be tempted to make a premature purchase but on the other hand, it's important for buyers to keep themselves informed of the property market in an early stage so as to make an informed decision. If we can share our views of the pros and cons of various projects, it's be beneficial for all buyers.

Just my opinion.

Leroy said...

I agree with Smart Buyer. Buying a property needs a lot of homework. Many factors, besides price, should to be researched and considered too.

Right now, more talks are on prices simply because we are faced with a hyper-speculated 2007 against a combined effect of new wave of supply increase in 2009/10 plus an unexpected worst economic crisis. So the magnitude of price swing is going to be big. But the facts are clear now, prices will fall. Anyone here who disagree should also challenge our ministers why they are revising our GDP growth forecast to between -2% to -5%.

Nevertheless, we should not neglect other important factors, especially, if you are choosing your new home. Happy shopping to all. Gong Xi Fa Cai!

Anonymous said...

Hello all
Yeah smart buyer, i suppose when i said dont look, i really meant, dont go view properties. I do agree we should do couch potato property search to monitor the market. I was actually speaking of myself ...i know that if i look and i like -i would be so tempted to make a premature purchase. So i guess the lesson here is to know yourself.
cheers, M

Anonymous said...

The readers here have made useful and informative contribution. Honestly, i think property prices here is very high after the big run up in 2005/2007 compare to other countries where the shakeout has gather healthy momentum but not in Singapore. Banks after banks and corporates after corporates are losing by the millions and billions. For the 1st time, our Government touches our precious reserves and Singapore is the first country in Asia to enter into a full blown serious recession of 2 to 5% negative growth. Something is terribly wrong. There is still little distressed sales and the full impact of the economic crisis have not really felt broadly in Singapore yet. You dont need a genius or economists to conclude that any entry now is premature. If ever prices fall to below 2003 or earlier level, you may consider but take your time. I would prefer to buy a second hand or older property as long as it is property maintained and well located.New condominium units are crowded and the developers had exploited buyers with bay windows and planter boxes.They are more expensive even at this time because sellers and speculators still enjoy large capital gains after the last sharp run. We are entering a dangerous time and even a large dose of fiscal stimulus by the government would not help. It is medicine that come too late to save a dead patient. The damage is extremely serious and beyond immediate repair and it will take a long time to recover and for the stimulus to work. My honest view is STAY AWAY, we are entering into hardship and you dont know what will happen suddenly to your job or Singapore.

Anonymous said...

Everyone,

What anymous said on the 21st January is the reality.

Furthermore, always keep in mind about liquidity. You want to buy something you can easily sell. Better wait for Q409 or Q110 and see what is available on the market.

Golden Rule: Buy low and sell high

Enjoy

Anonymous said...

Thanks for the blog. My 2 cents worth.

Instead of looking at the price if it is near 2004-2006 level, can we look at the unemployment figures and the help that the government is giving? So as to give a leading indicator if the market got any chance of recovering. The increase of unemployment rate and increase in budget by government to help singaporean = less chance market is going to get better near term.

Govt Stimulus Package cannot save property market said...

Dear Anonymous,
I agree with you: We should look at the unemployment figures and the help the govt is giving to stimulate economy.

I also agree with you that the property market is unlikely to recover in the near term. In my opinion, the rising unemployment is likely to put more and more downward pressure on property price esp those priced above half a million.

I don't see the govt stimulus package turning the market around. Despite the govt's effort to keep jobs, retrenchment will still rise and pay will still fall. When people get retrenched or suffer a pay-cut, affordability simply falls. This puts a brake on demand on one hand and increase supply on the other as more and more highly geared property owners are forced to liquidate their properties.

Just my 2 cents.

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Dear visitors:
Your comments are most welcome!

The blogger here has been affectionately named by close allies as "Smart Buyer" but really, he's not smart. Smart Buyer just believes that being prudent is smart. That's the essence of the message of this blog and Smart Buyer hopes it'll benefit other property buyers.

Smart Buyer :)